Microsoft backs OpenAI restructuring in new tentative deal

Microsoft and OpenAI have joined hands in a new non-binding deal that enumerates terms for a new strategic relationship.

Under this preliminary agreement, tech giant Microsoft will allow OpenAI restructuring, turning it into a more profitable company and marking a paradigm shift in the funding of ChatGPT boom.

Although the clear terms of the agreement are unknown yet, both tech companies are working to seal a non-binding agreement into a definitive deal.

The deal is highly significant for OpenAI as the artificial intelligence company strives to raise capital, aiming to reshape governance structure and go for an initial public offering to fund AI development.

For years, both Microsoft and OpenAI have been in talks for investment purposes. In 2019, Microsoft invested around $1 billion in OpenAI followed by $10 billion in 2023.

As per their previous deal, Microsoft possessed exclusive rights to sell OpenAI’s tools by using its Azure cloud computing platform.

Microsoft was once called OpenAI's fundamental computing provider. After reducing its authority over OpenAI, the AI company is now entitled to develop its own data centre project named Stargate.

Moreover, OpenAI has entered into $300 billion worth of several agreements with Google and Oracle.

In a recent deal, both companies did not reveal the percentage that Microsoft will own in OpenAI.

Microsoft is also striving to maintain its dominance by developing its own AI models that will reduce its dependence on other AI companies.